Why the UAE Wants to Be Club Med for the World's Kleptocrats

Since Russia’s inva­sion of Ukraine, the huge flow of Russian wealth hid­den off­shore has gone in only one direc­tion: away from its homes in London, New York and oth­er once-wel­com­ing cities to escape the new “iron cur­tain” of Western sanc­tions. As Russian oli­garchs and klep­to­crats have looked for anoth­er safe haven else­where, they have found it most notably in Dubai. Despite being a sup­pos­ed­ly key U.S. part­ner in the Middle East, the United Arab Emirates has done more than any oth­er coun­try to help Russian klep­to­crats evade U.S.-led sanc­tions over the war in Ukraine.

The UAE has had a dirty mon­ey prob­lem for years, as the Gulf monar­chy has shown con­sid­er­able tol­er­ance toward incom­ing for­eign wealth in any shape or form. From Turkish mob boss­es and over-sanc­tioned Middle Eastern author­i­tar­i­ans to Iran’s Revolutionary Guards, the Emirates have become one of the world’s lead­ing mon­ey laun­dro­mats. Yet, unlike Panama, the Cayman Islands or the British Virgin Islands, attract­ing dirty for­eign cap­i­tal is not just a mon­ey-mak­ing scheme for the UAE. It has become an inte­gral part of its pol­i­cy aims to secure its inter­ests through net­works of for­eign influ­ence that blur the lines between busi­ness and diplomacy.

Wedged between the likes of Saudi Arabia and Iran and haunt­ed by fears of los­ing its U.S. pro­tec­tion, the UAE has found it dif­fi­cult to com­pete with its larg­er neigh­bors in the more con­ven­tion­al for­eign pol­i­cy spaces. In order to secure the fed­er­a­tion of city states that make up the Emirates, Abu Dhabi has had to blend hard and soft pow­er to cre­ate dif­fer­ent levers of influ­ence that help the rich yet con­ven­tion­al­ly small state.

In so doing, the UAE has rede­fined state­craft, del­e­gat­ing key parts of its for­eign pol­i­cy from large, state-run bureau­cra­cies and min­istries to small­er net­works made up of state and non-state actors, with busi­ness inter­ests often over­lap­ping with nation­al secu­ri­ty. These var­i­ous net­works are effec­tive­ly con­trolled and direct­ed by a pow­er­ful tri­umvi­rate of three broth­ers in the rul­ing fam­i­ly in Abu Dhabi: Mansour bin Zayed al-Nahyan, bil­lion­aire busi­ness­man and min­is­ter; Tahnoon bin Zayed al-Nahyan, the UAE’s nation­al secu­ri­ty advis­er; Mohammad bin Zayed al-Nahyan, Abu Dhabi’s crown prince and de fac­to ruler. The net­works they have cul­ti­vat­ed to serve Emirati inter­ests include influ­en­tial for­eign dig­ni­taries, com­mer­cial enter­pris­es, banks, and Washington lob­by­ists and even think tanks—many either tied into Mansour’s invest­ment port­fo­lios or to Tahnoon’s Office of Strategic Affairs.

Delegating and even out­sourc­ing the UAE’s for­eign pol­i­cy­mak­ing to these enti­ties pro­vides the Emirati gov­ern­ment with plau­si­ble deni­a­bil­i­ty when cre­at­ing var­i­ous depen­den­cies over­seas. The state-owned logis­tics multi­na­tion­al DP World, for exam­ple, is used to gain access to crit­i­cal infra­struc­ture like ports in places such as Djibouti, Berbera, Aden and Dakar, which gives the UAE sig­nif­i­cant polit­i­cal and eco­nom­ic lever­age in those coun­tries. The UAE does the same with its deep net­works in glob­al finance. During the Saudi- and Emirati-led block­ade of neigh­bor­ing Qatar, the Emirates’ influ­ence inside Luxemburg-based Banque Havilland was used to wage a finan­cial war against Qatar to desta­bi­lize its cur­ren­cy. The UAE has also cultivated—and lav­ish­ly funded—networks of con­ser­v­a­tive and right-wing politi­cians, lob­by­ists and advis­ers to influ­ence and sub­vert offi­cial pol­i­cy­mak­ing in Brussels, London and Washington.

Dubai’s sta­tus as a glob­al finan­cial hub—but, real­ly, a place where it is easy to do busi­ness and hide your mon­ey, a Club Med for author­i­tar­i­ans and their financiers—is key to the UAE’s murky busi­ness-meets-for­eign-pol­i­cy agen­da. From lux­u­ry beach­front prop­er­ties to gold, cryp­tocur­ren­cies and oth­er shad­owy finan­cial ser­vices, the UAE has pro­vid­ed a range of invest­ment oppor­tu­ni­ties to a cast of unsa­vory fig­ures: Syrian regime financier Rami Makhlouf; Libyan war­lord Khalifa Haftar; oust­ed Afghan President Ashraf Ghani, try­ing to hide away stolen pub­lic funds; mem­bers of ex-Kazakh strong­man Nursultan Nazarbayev’s clan, in need of a safe spot for their mon­ey; and Iran’s sanc­tioned Islamic Revolutionary Guard Corps, look­ing to laun­der mil­lions of dol­lars to fund its over­seas operations.

With no ques­tions asked, the UAE offers the per­fect pack­age for any­one try­ing to bypass sanc­tions for ill-got­ten gains through cor­rup­tion, exploita­tion and oth­er illic­it activ­i­ties. For these pow­er­ful elites, the Emirates have become syn­ony­mous with their own fam­i­ly’s wealth and finan­cial security—something the Emirati gov­ern­ment can then uti­lize to bro­ker oth­er deals, shape atti­tudes and behav­ior, and get pref­er­en­tial treat­ment for the UAE in the coun­tries of these elites amid a glob­al com­pe­ti­tion for influ­ence and access.

The same is true of har­bor­ing the Kremlin’s klep­to­crats. In a coun­try like Russia, where state and com­mer­cial net­works are as inter­twined as they are in the UAE, much of the seem­ing­ly pri­vate Russian wealth and equi­ty leav­ing places like London, Monaco or Switzerland inevitably has links to President Vladimir Putin. At least 38 busi­ness­men and offi­cials tied to Putin’s inner cir­cle and sub­ject­ed to Western sanc­tions own 76 prop­er­ties worth more than $314 mil­lion in Dubai alone, as The New York Times has report­ed. That list includes fig­ures close­ly involved in Putin’s war efforts. Alexander Borodai, Russia’s for­mer seces­sion­ist leader in Ukraine’s Donetsk region, and Ruslan Baisarov, one of Russia’s wealth­i­est busi­ness­men and the chief financier of Chechen leader Ramzan Kadyrov, own mul­ti­mil­lion-dol­lar prop­er­ties in the Emirates. Kadyrov, whose Chechen mili­tias have been accused of war crimes in Ukraine, and who him­self oper­ates as the Kremlin’s de fac­to Middle East envoy, main­tains a per­son­al rela­tion­ship with Abu Dhabi’s crown prince, Mohammad bin Zayed. It is no sur­prise that he also has at least one opu­lent vil­la in Dubai, which he vis­its frequently.

Since the begin­ning of Russia’s war against Ukraine, Mansour and his office have increased efforts to incen­tivize Russian tycoons and oli­garchs to join their com­pa­tri­ots on the shores of Dubai, because he under­stands how impor­tant their net­works can be not just in man­ag­ing bilat­er­al rela­tions with Moscow, but in advanc­ing mutu­al inter­ests in the region. Russia and the UAE share a fear of democ­ra­cy and civ­il soci­ety mobi­liza­tion, instead cham­pi­oning so-called author­i­tar­i­an sta­bil­i­ty in the Middle East.

In Libya, the UAE merged its own offi­cial and unof­fi­cial net­works with those of the Kremlin. Russia’s noto­ri­ous mer­ce­nary out­fit, the Wagner Group, has oper­at­ed in Libya from shared Emirati bases in al-Khadim and al-Jufra. UAE-spon­sored mili­tia net­works of Haftar’s self-styled Libyan National Army inte­grat­ed with Russia’s mer­ce­nar­ies in their failed attempt to seize Tripoli in 2019. The Pentagon lat­er alleged that it was Abu Dhabi that bankrolled the Wagner Group dur­ing that period.

All this is why the UAE isn’t rat­tled by the rep­u­ta­tion­al costs of becom­ing such a vis­i­ble hub for dirty mon­ey. Despite recent­ly being list­ed on the mon­ey-laun­der­ing “grey list” of an inter­na­tion­al watch­dog, the Financial Action Task Force, it is unlike­ly that the Emirati gov­ern­ment will clamp down on these delib­er­ate defi­cien­cies in its finan­cial system—since it can strate­gi­cal­ly exploit them for lever­age with influ­en­tial part­ners and clients in areas of the UAE’s strate­gic inter­ests. The oppor­tu­ni­ties that Russian mon­ey pro­vides for the UAE—in cul­ti­vat­ing ties that mix busi­ness and diplo­ma­cy, and build­ing net­works for both polit­i­cal and eco­nom­ic influence—far exceed any image prob­lems in the West. With the Kremlin’s klep­toc­ra­cy rely­ing on the UAE to shield itself from Western sanc­tions, Abu Dhabi will sure­ly be able to call in a favor with Moscow before long.

Original source of arti­cle: dawnmena.org

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